New York Real Estate Salesperson ExaminationContractsMedium
A seller lists their property for sale with a broker. The listing agreement states that the broker will receive a 6% commission if they find a buyer who is 'ready, willing, and able' to purchase the property on the seller's terms. Two weeks later, the broker presents such a buyer, but the seller decides not to sell the property. Has a contract been formed between the seller and the buyer?
- ANo, because the buyer's offer was not communicated in writing.
- BYes, because the broker produced a 'ready, willing, and able' buyer.
- CNo, because the seller did not accept the buyer's offer.
- DYes, because the listing agreement created a binding obligation for the seller to sell.
Show answer & explanationAnswer & explanation
Correct answer: C. No, because the seller did not accept the buyer's offer.
While the broker may have earned their commission by finding a ready, willing, and able buyer, a contract between the seller and the buyer is only formed when the seller accepts the buyer's offer. The seller's decision not to sell means no acceptance occurred.
Why the other options are wrong
- A. While real estate contracts generally must be in writing, the primary issue here is the lack of acceptance, not the form of the offer.
- B. This is relevant to the broker's commission, but not to the formation of a contract between buyer and seller.
- D. The listing agreement binds the seller to pay commission under certain conditions, but not to sell the property itself to a specific buyer.
Offer and Acceptance: Seller-Buyer
A legally binding real estate purchase contract between a seller and a buyer is formed only when the seller unequivocally accepts the buyer's offer.
- Offer must be clear.
- Acceptance must be unconditional.
- Communication of acceptance is vital.
Memory trick: Offer and Acceptance: It takes two to tango, one to ask, one to agree.